Public Employees Benefits Board Meeting

1
Public Employees Benefits Board Meeting

• August 6, 2002
• Procurement Overview
• Medical Benefit Decisions for 2003

2
PEBB Value Based Purchasing

• Jeff Thompson, M.D., M.P.A.
• Health Care Authority

3
Value Based Purchasing

• Communicated our Value Expectations in the
  Request For Proposal
• Improved Data Driven Metrics to Assure Quality
  and Access are Commensurate with Cost
• Increased Emphasis on Access and Quality
• Improved Affordability using the Value Based
  Equation
• Value Quality, Access Cost
• Employed Measurable Performance Expectations in
  Contracts that Can Be Used to Evaluate Performance

4
Value Based Purchasing 2003 Snap Shot
Evaluation Weights Access 30 Quality
20 Price 50
5
Procurement Overview Results

• MaryAnne Lindeblad
• Assistant Administrator,
• Public Employees Benefits Plan

6
Summary of 2003 Renewals

• Key Facts from PEBB Renewals
• Surveys of other commercial renewals and trends
• Other Purchasers Experience

7
Key Facts PEBB Renewals

• Plans Financial Position
• 6 of 8 insured plans report 2001 loss ratios in
  excess of 100 (up from 2 of 9 in 2000)
• Experience Trends and Rating Trends
• Experience trends have exceeded the rating trends
  used in developing 2002 premiums, as a result...

8
Key Facts PEBB Renewals

• Rating Trends Have Increased
• Medical trends range from 7 to 25 (compare to
  7.5 - 17 last year)
• Prescription drug trends range from 16.1 to 30
  (compare to 15 - 22 last year)

9
Other Renewals and Trends

• Mercer survey of commercial renewals
• as of 7/15 312 renewals, avg. increase of 22.1
• Milliman survey of HMOs serving the commercial
  market
• Average expected increase of 17 for 2003
• Hewitt survey of initial 2003 premium increases
• Average increase of 22

10
Other Purchasers Experiences

• CalPERS 2003 Renewals
• Average 25 increase (range of 15 to 40)
• Two plans dropped from program (350,000 members
  must switch plans)
• Large self-insured increases (22 for PERSCare
  and 19 for PERSChoice)
• Other states initial bid increases range from
  14 to 19, some with significant benefit
  reductions

11
Procurement Results

• Budget CY 2003
• Non Medicare Non Medicare Premium Increase
  Non Medicare Premium Increase With
  Alternatives With Alternatives
• Managed Care Organizations (MCOs) 9 22
• UMP 13 15
• MCOs and UMP 11 20
• Budget CY 2003
• Medicare Medicare Premium Increase
  Medicare Premium Increase
  With Alternatives With
  Alternatives
• Managed Care Organizations (MCOs) 20 28
• UMP 11 -3
• MCOs and UMP 16 11

12
Procurement Results

• Six managed care choices
• At least one managed care plan and UMP in every
  county
• One plan expanding into six additional counties
• Five counties with one managed care plan - five
  in 2002
• One plan with frozen enrollment
• Eliminating one plan - fewer than 5 of members
  will have to change providers

13
2003 Proposed Benefit Design Changes Employee
Contributions

• .

14
Proposed PEBB Medical Benefit Design Changes for
2003

• 10 Reduction in Prescription Drug Expenditures
• Three tier pharmacy benefit
• Retail 30 day supply Co-Pay
  GHC/Options Kaiser
• Formulary generic, all insulin and diabetic
  supplies 10 10 10
• Formulary brand name 25
  30 25
• Non Formulary brand 40
• Mail Order 90 day supply Co-Pay
  GHC/Options Kaiser
• Formulary generic, all insulin and diabetic
  supplies 20 20 20
• Formulary brand name 50
  40 50
• Non Formulary brand 80
• Group Health/Options Kaiser proposed optional
  benefit designs to achieve a 10 expenditure
  reduction

15
Employee Contributions CY03

• State Index Rate 262
• Subscriber Subscriber
  Plan Name Subscriber Spouse Child(ren)
  Full Family
• Kaiser Foundation 12 33 21 42
• Group Health Coop. 30 69 52 91
• PacifiCare 40 91 71 121
• Options Health Care 44 98 77 131
• Regence Care 54 118 94 158
• Premera Foundation 67 144 117 194
• Uniform Medical Plan 36 82 63 109
• Average Employee Contribution 74

16
Medicare Retiree Subsidy CY03

• Medicare retiree explicit subsidy 92.74 per
  member per month
• Established in Legislative Budget
• CY02 subsidy 85.84 per member per month
• RCW 41.05.085 established subsidy, limits subsidy
  to no more than 50 of the premium Board
  authority to establish amount of any subsidy for
  spouses and dependents.

17
2003 Medicare Retiree Contributions (after
subsidy)

• Estimated 2003 1st Tier Rate
  Increase Percent of Plan Name Retiree Pays
  from 2002 Enrollment
• PacifiCare 84.14 10 11
• Kaiser Foundation 89.25 16 4
• Group Health Coop. 113.53 40 29
• Options Health Care 125.41 20 1
• Regence Care 182.53 16 2
• Premera Foundation 275.38 42 7
• Uniform Medical Plan 132.62 -10
  46

18
Proposed UMP Benefit Design Changes for 2003

• Presented to the Public Employees Benefits Board
• August 6, 2002

19
Overview of Proposed Changes for 2003

• Out-of-state network
• Standard Coordination of Benefits (COB)
• Rx benefits cut 10 from current design

20
Out-of-State Care Current Benefits

• Providence Preferred network in parts of Oregon
  (most Oregon claims)
• Elsewhere
• Services are covered at 80 of the UMP allowed
  charge (based on regionally-adjusted fees)
• Providers may balance bill patients for charges
  above the UMP allowed amount
• Enrollees pay 20 coinsurance for preventive care
  services

21
Out-of-State Care Proposed for 2003

• Beech Street network to be offered outside of
  Washington and Oregon
• Large national PPO
• 3,300 hospitals
• 345,000 professional providers
• 50,000 ancillary providers
• Providers reimbursed based on Beech Street
  contracted rates UMP pays 80 benefit
• May not balance bill UMP patients
• Preventive services (as listed in the UMP
  Certificate of Coverage) covered in full

22
Out-of-State Care Proposed for 2003

• Services from non-Beech Street providers will be
  paid at the non-network rate (60 of UMP allowed
  charge)
• Exceptions (to be paid at 80)
• Emergency care
• Areas in U. S. where Beech Street network isnt
  adequate
• Foreign providers
• Medicare retirees services are subject to
  Medicares maximum fees, so wont be enrolled in
  Beech Street
• Oregon (whole state) will be served by Prov
  Preferred network non-network claims will be
  paid at 60 except where there are access problems

23
Coordination of Benefits

• Current
• Nonduplication of benefits
• Frequently results in little or no UMP payment on
  medical claims with Medicare primary
• Proposed for 2003
• Standard Coordination of Benefits (consistent
  with COB approach used by PEBB MCOs)

24
Non-Duplication of Benefits

• Current UMP COB
• Medicare Allowed Charge 100.00
• Medicare Payment 70.00
• Balance 30.00
• UMP Allowed Charge 100.00
• Normal UMP Payment 90.00
• UMP Payment 20.00 Normal UMP Benefit minus
  Medicare Payment
• Enrollee Responsibility 10.00
• Standard COB UMP Proposal 2003
• Allowed Charge 100.00
• Medicare Payment 70.00
• Balance 30.00
• Normal UMP Payment 90.00
• UMP COB Payment 30.00
• Enrollee Responsibility 0

25
Overview of Proposed Changes to UMP Prescription
Drug Benefit

• More restrictive pharmacy network
• Incentive formulary design
• Higher mail order copays
• Changes to cost-sharing cap per retail
  prescription

26
More Restrictive Pharmacy Network

• Non-network pharmacies in Washington State
  include
• Walgreen's
• Albertson's
• Some independent pharmacies

27
Mail Order and Retail Prescription Benefits

• Up to a 90-day supply per prescription
• Subject to annual prescription drug deductible of
  100 per individual or 300 per family (no
  change)
• Retail coinsurance percentages (no change)
• Tier 1 80
• Tier 2 70
• Tier 3 50

28
Incentive Formulary Design(replaces current
voluntary formulary)
29
Mail Order Copayments
30
Cap on Enrollee Cost-share for Retail
Prescriptions

• Current
• 75 maximum for up to a 90-day supply
• Applies to all drug tiers

• Proposed for 2003
• 50 maximum for up to a 30-day supply
• 100 maximum for up to a 60-day supply
• 150 maximum for up to a 90-day supply
• No cap for Tier 3 drugs or prescriptions filled
  at nonparticipating pharmacies

31
Other Proposed Changes in Prescription Drug
Coverage

• Elimination of coverage for over-the-counter
  drugs
• Brand name antihistamines (and antihistamine/decon
  gestant compounds) will be covered in Tier 3
  generic antihistamines will be covered in Tier 1

32
Next Steps

• 2003 Open Enrollment is October 21st through
  November 30th
• 16 benefit fairs - extending hours 11 a.m. to 6
  p.m.
• On-line enrollment
• Decision support tool updated for 2003
• All materials for actives available via web

33
August 6, 2003 Voting Decisions

• Benefit Changes
• Employee Contributions
• UMP Changes
• Retiree Subsidy